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FCC Poised to Dramatically Alter 'Net-Neutrality' Rules (Report)

UPDATED: Internet service providers would be allowed to charge companies different rates for faster lanes of service.

In a significant change in the Obama administration position on net neutrality, the Federal Communications Commission is expected to begin circulating new rules on Thursday that would open the way for content companies to pay Internet service providers like Comcast, Charter, Verizon, AT&T and Cox Communications for faster service and special access to consumers.

The new rules come after a federal appeals court in January struck down net neutrality rules pushed by the Obama administration and approved by the FCC that prohibited Internet providers from blocking or prioritizing Web traffic. FCC Chairman Tom Wheeler has said in February that there would be new rules proposed in light of the court ruling. The plan to propose new rules was first reported by The Wall Street Journal.

In a statement, Wheeler denied the proposed rules would be a "turnaround in policy."

"There are reports that the FCC is gutting the Open Internet rule. They are flat out wrong. Tomorrow we will circulate to the Commission a new Open Internet proposal that will restore the concepts of net neutrality consistent with the court's ruling in January," Wheeler said. "There is no 'turnaround in policy.' The same rules will apply to all Internet content. As with the original Open Internet rules, and consistent with the court's decision, behavior that harms consumers or competition will not be permitted."

Under the proposed rules, Internet service providers would still be prevented from blocking or discriminating against specific websites but they would be able to offer preferential treatment as long as it is done at a reasonable price and is offered to everyone. It will be up to the FCC to decide what is reasonable.

Netflix has already made a similar arrangement with Comcast to ensure its video content gets to subscribers promptly. Now others who offer large amounts of video that can strain a network will be able to make similar arrangements if they wish.

Opponents of this kind of special treatment for those willing to pay have fought hard to ensure all Internet traffic is treated equally. However, broadband distributors have complained that some sites and some customers use a lot of video, which takes up much more capacity on systems than someone who only checks email and surfs the Web occasionally.

The FCC is also expected to create new disclosure requirements for all broadband providers that would include the speed offered and how much congestion there is on the service. It will not cover wireless carriers although in the future they could be subject to new rules if they make deals with content providers.